Renewable Energy Property Tax Assessment
Locally Assessed Renewable Energy Property
Solar photovoltaic (PV) and wind energy facilities with a capacity of 2 megawatts (MW) AC or less are assessed locally for property taxes. Additionally, low impact hydro, geothermal, and biomass facilities with a capacity of 2 MW or less and which were placed in service prior to January 1, 2010, are also assessed locally for property taxes. In assigning value to renewable energy property, local assessors are required to use the cost approach outlined in the Assessors’ Reference Library. Assessors must also examine the sales comparison and income approaches, both described in the Assessor’s Reference Library.
State Assessed Renewable Energy Property
Renewable energy systems with a capacity greater than 2 MW are assessed for property taxes by the State Assessed Properties Section of the Division of Property Taxation. Additionally, small or low impact hydro, geothermal, and biomass facilities of any size which were placed in service on or after January 1, 2010, are assessed by the state for property taxes. These facilities are valued as though their actual value for property taxation is that of a non-renewable energy facility, including all direct and indirect costs. The incremental value of the renewable energy facilities above the non-renewable facilities is disregarded.
The Division of Property Taxation is responsible for determining the nonrenewable comparison value each year. Starting in 2014, state assessed properties use a five-year rolling average of the most recent rates. This valuation methodology applies to renewable energy that is connected to the grid through an interconnection meter. It does not apply to off-grid customer-sited resources.
For 2015, if the renewable energy facility was already in service before January 1, 2012, then only the generation cost of capital threshold rate is applied. For any new facility placed in service on or after this date, the additional delivery capital cost threshold rate will be included. A template spreadsheet is available at the above website that can be used to estimate property taxes for renewable energy property.
Generation Cost of Capital Threshold Rate
For the 2020 assessment year, the following capital cost threshold rates are to be applied for generation, based on the nameplate capacity of the facility:
- 0-2 MW: $1,267 per KW
- 2.001-5 MW: $1,146 per KW
- 5.001-10 MW: $1,001 per KW
- 10.001-50 MW: $645 per KW
- 50.001-100 MW: $518 per KW
- >100.001: $334 per KW
Delivery Cost of Capital Threshold Rate
For renewable energy facilities going into service on or after January 1, 2012, there is an additional valuation component to be considered for associated transmission lines. The typical non-renewable delivery threshold is $54,000.